Surprise!

Toilet paper isn’t really made to last.  It is flimsy, tears easily, practically dissolves when wet.  It’s nowhere near as durable as a car.  For instance, you rarely use it, lock it in the garage, then expect to reemploy it the next morning.  You can do that with a car.  Not with toilet paper though.  That’s why economists call it a consumer non-durable.

Since consumer durables are built to last for a few years, they are generally made of hardier stuff than is toilet paper.  In turn this tends to drive their price up.  Unlike TP, one does not usually buy a car every month or so.  Catsup, light bulbs, the aforementioned bathroom convenience, and a myriad of other items tend to be bought with regularity because, for various reasons, they just don’t keep.  Economists are interested in how often and how much you purchase (retail sales) of both the durable and non-durable consumer products made both here and abroad.  It gives them some insight into the general health of our overall economy.

When we here at Atlas send our commentary to you each day, it usually dwells on a single facet of the overall economy such as retail sales.  Over time we hope you will begin to integrate all of these separate data points into a somewhat intuitive whole which gives you a sense, a feeling, about the general direction in which things are headed.  Some of the indicators we describe (like the Chicago Fed National Activity Index) are quite comprehensive.  Most are not.

One indicator we rarely discuss which also encompasses a broad range of data is produced by the folks at Citigroup.  It is called the Surprise Index and measures whether the various data points we report (plus many more) came in as expected, exceeded consensus estimates, or fell short.  It had scored a negative 65.3 in July, just a few months ago, but has now soared to a positive 57.  If you have been a diligent reader of our daily missives, you may have already developed a sense that things seemed to be improving despite some of the more dire headlines our media delights in presenting.  If you haven’t, then surprise!  A tidy little bundle of hope awaits you just in time for the holidays.